Banks to buy back bad debts from VAMC

Hanoi (VNA) – Settlement of bad debts has shown positive signs after some banks announced they would buy back all their non-performing loans they sold to the Vietnam Asset Management Company (VAMC).

At a meeting on January 9, Vietinbank Chairman Nguyen Van Thang said that in 2017 his bank would focus on settling bad debts and would buy all bad debts that it sold to VAMC.

In the context of fierce competition among banks, Vietinbank would completely settle the bad debts in 2017 instead of 2018 as planned earlier, Thang said.

From 2007 to 2010, Vietinbank settled nearly 10 trillion VND (440.52 million USD) of bad debts through a provision of risk loans as well as recoupment and sales of bad debts.

By the end of 2016, Vietinbank’s bad debt ratio was kept under 1 percent. The bank’s outstanding loans in 2016 reached 720 trillion VND, up 18 percent against 2015.

Vietinbank posted a profit of 8.25 trillion VND in 2016, up 12 percent against 2015, while its total assets by the end of 2016 also surged by 22 percent to 947 trillion VND.

Earlier, Vietcombank’s Chairman Nghiem Xuan Thanh also said that in 2017, his bank would buy all 4.3 trillion VND of NPLs that it sold to VAMC, three years sooner than as planned.

Thanh said that Vietcombank would settle bad debts itself through the use of provision, hoping that as and when the bad debts are recouped the bank’s financial capacity would improve, helping it continuously to cut lending interest rates.

At the meeting with Vietcombank last week, Governor of the State Bank of Vietnam Le Minh Hung told Vietcombank to focus on settling NPLs through the sale of mortgaged assets.

Nguyen Duc Kien, deputy head of the National Assembly’s Economic Committee, said that the move of buying back bad debts shows that the business performance of the banks has been better.

With the move, Kien said, the pledge to settle bad debts of credit institutions with the use of the State budget at a minimum is becoming a reality.-VNA